In the past couple months, job growth has been steady, but a recent report showed that growth came to a halt in March.
Should economic conditions decline, small- to medium-sized retailers could experience periods with slow cash flow, which can be tough to deal with. Fortunately, inventory financing could be utilized to help them out if need be.
According to the U.S. Labor Department, the economy added just 88,000 jobs in March, which was less than half the expected number. This figure fell short of even the most conservative estimates and economists are now preparing for weaker results through the summer, according to the Washington Post.
"We can't break out," Stuart Hoffman, chief economist at PNS Financial Services Group told the news source. "This is the old two or three steps forward, one step back."
Data from the labor department showed the professional services sector added 51,000 jobs in March, while the government lost 2,000, not counting those at the U.S. Postal Service, which shed 12,000 positions.
One of the main causes behind this negative report was the sequester, which the Congressional Budget Office estimated will cost the economy 750,000 jobs. Other private economists believe the affects could be less significant.
Retail industry impacted by jobs report
The poor jobs report is discouraging to the retail industry, National Retail Federation president and CEO Matthew Shay said.
"Today's economic numbers on jobs and unemployment are disappointing, at best," he said. "A disturbing barometer of our nation's fiscal health can be found in the jobs lost in the retail trade sector, the only sector that has pretty consistently provided a lift for our overall economy through this slow recovery."
Should this lead to a slowdown in economic activity, small- to medium-sized retail businesses could enter a lull where cash flow could fall below normal levels. Additionally, fewer sales could lead to cash being tied up in other areas, which might make it difficult for a business to obtain a loan from a bank or take advantage of growth opportunities.
However, if one of these financial institutions turns a retailer away, inventory financing could be an option. This type of asset-based lending enables a small- to medium-sized retailer to obtain financing when a bank says "No."
Using current inventory, a business can receive a revolving line of credit, which can be used to help keep their shelves stocked and to get through times where cash flow may slow.